Illinois Board Issues Warning On Hybrid Appraisals

[J Grant]

GH- If an appraiser is engaged to inspect a property just to inspect a property then that activity does not fall under the definition of appraisal practice even though they hold the license. There is no such thing as a USPAP compliant inspection and it's actually unethical to invoke USPAP outside of appraisal practice. And that's not me making things up, either

If an appraiser is engaged to inspect a property just to inspect a property ( the inspection was done for non appraisal purpose ) then indeed they are not engaged in appraisal practice for that stand alone task. But if they inspect a property for use in an appraisal, then on a URAR they sign they did inspect property and it is part of the appraisal, or if they did it to assist another appraiser, per FAQ they provided significant assistance and should be disclosed/named as such.

 

[George Hatch]

"George Hatch, post:

You still haven't responded to my question: How would you reword the term "appraisal practice" to include activities that can and are performed by non-appraisers outside of appraisal practice on a regular basis?

You have it backwards. We can't reword the term ""appraisal practice" to include activities that can and are performed by non-appraisers outside of appraisal practice on a regular basis.

But when those non appraisers perform activities on a property FOR APPRAISAL PURPOSE , USPAP should make clear that in those cases, a person is acting as an appraiser /engaged in appraisal practice..

Example: RE agent inspects a house for their own listing, they are not inspecting it for appraisal purpose, thus they are not acting as an appraiser ...even if later an appraiser might use the listing as a source. urce.
But when a RE agent is hired to inspect a house for appraisal use, purpose, THEN they are engaged in appraisal practice.

Do you understand the difference?

It would make appraisals that use non appraiser parties for activities as engaged in appraisal practice or acting as appraisers, thus making those reports non USPAP compliant.

Just because appraisers make maps for their reports doesn't make the act of making a map part of appraisal practice. Just because appraisers take pics doesn't make the act of taking pics part of appraisal practice. etc, etc

Now analyzing market trends, comparing properties to each other for valuation purposes, (actually) developing HBU opinions - those are the kinds of activities that appraisers perform that are considered part of appraisal practice.

Face it, the argument that inspecting (by itself) is appraising will not hold up under scrutiny. If I stick you on the stand and run a progression of yes/no questions on you as to what you did and didn't do in that desktop assignment then by the time I get through with you there won't be any question as to whose opinions and conclusions you relied upon in your analyses. The only way you escape that result is by claiming that you put no thinking of your own into your comparisons.

If I stick one of these inspectors on the stand and start asking them yes/no questions about how they were engaged, what their instructions were, what their clients expected of them, how they represented themselves, etc - those results are inevitable, too.

If I stick one of these clients on the stand - same thing. I will structure that exchange in such a way as to parse what their expectations and instructions were.

If these state appraisal boards have not envisioned how these exchanges will go during an appeal then they might not be prepared for the outcomes that can ensue if argued competently.

 

[J Grant]

Just because appraisers make maps for their reports doesn't make the act of making a map part of appraisal practice. Just because appraisers take pics doesn't make the act of taking pics part of appraisal practice. etc, etc

Now analyzing market trends, comparing properties to each other for valuation purposes, (actually) developing HBU opinions - those are the kinds of activities that appraisers perform that are considered part of appraisal practice.

Face it, the argument that inspecting is appraising will not hold up under scrutiny. If I stick you on the stand and run a progression of yes/no questions on you as to what you did and didn't do in that desktop assignment then by the time I get through with you there won't be any question as to whose opinions and conclusions you relied upon in your analyses. The only way you escape that result is by claiming that you put no thinking of your own into your comparisons.

These arguments are inane, piece meaning individual tasks out of the whole and saying they are "not part of appraisal practice". What leads to the analysis for HBU ? For example,? A plethora of tasks, which might be looking at a zoning MAP, analyzing PHOTOS after taking them, among other tasks. It is disgusting to piecemeal parts of a whole of the SOW out to disavow it from appraisal practice, just to pave the way for non appraiser to do a significant part of that practice ( inspect ) . Analyzing market trends, can mean looking at a graph, does that mean creating or reading the graph is not part of appraisal practice ? Many indivdual tasks make up the whole to achieve the analyses, value and HBU analsius Only in the slippery umbrella of USPAP would each task comprising an analysis /appraisal be singled out like that for non inclusion as appraisal practice.

that inspecting is appraising will not hold up under scrutiny . Because USPAP is a fail : Inspecting FOR APPRAISAL purpose should be defined by USPAP as part of appraising. Of course inspecting for other purposes is not appraising.

 

[DWiley]

If these state appraisal boards have not envisioned how these exchanges will go during an appeal then they might not be prepared for the outcomes that can ensue if argued competently.

One of my biggest fears is a state broad taking some sort of action against a "hybrid" report that sets a precedent, using some flawed emotional argument, making all desktops, all reviews, or even all 1004s equally in violation. Mr. Weaver's writing is a great example. If one cannot use a data source that expresses "opinions" about a property, then how could one ever do a review on form 2000? Or, how could one use comps from MLS?

 

[George Hatch]

A plethora of tasks, which might be looking at a zoning MAP, analyzing PHOTOS after taking them, among other tasks.

You knew enough to include the word "analyzing" in the above sentence as the operative term. I don't know why you're having so much difficulty accepting the fact that it is the analysis where the appraising occurs, not the taking of the pic.

Well, I do know why, but there's no point in beating that horse.

At any rate, do you plan on developing an entire list of activities that become appraisal practice only when performed during an appraisal? That's going to be some list.

 

[George Hatch]

I think some of you should put some thought into how you think this issue will actually play out over the next 5 years. Which arguments will prevail and which will fail.

 

[J Grant]

One of my biggest fears is a state broad taking some sort of action against a "hybrid" report that sets a precedent, using some flawed emotional argument, making all desktops, all reviews, or even all 1004s equally in violation. Mr. Weaver's writing is a great example. If one cannot use a data source that expresses "opinions" about a property, then how could one ever do a review on form 2000? Or, how could one use comps from MLS?

I find it hard to believe you actually fear this... what I can believe is it is a good strategic argument to allow non appraisers to inspect for hybrids.

How would a state board ruling (whatever it is) make every other source and in every other kind of report impossible to use?
The difference is this: When a RE agent or other party, developed for THEIR professional purpose ( such as a listing) an opinion, that opinion was made for RE agency marketing purposes, not appraisal purpose. Appraisers can make use of such a listing (including choosing to rely on or not rely on the opinion in a listing ) as a source ( assuming appraiser pays for /is a member of MLS service )

But now the RE agent is developing an opinion as part of their inspection for the appraisal,( , not for their listing ) The argument does not center around whether appraiser can rely or not rely on the RE agent's pinon when RE agent inspected for appraisal purpose , the argument is whether the RE agent;s opinion from the inspection for appraisal purpose means the RE agent was engaged in appraisal practice f

 

[DWiley]

Consider this - if you apply the "logic" that some are applying - do a field review on Form 2000, including your own value opinion, according to some, you would have to state that the original appraiser provided significant assistance to your review

LOL

 

[J Grant]

I think some of you should put some thought into how you think this issue will actually play out over the next 5 years. Which arguments will prevail and which will fail.

Probably the arguments that enrich the stakeholders will prevail, with USPAP shaping its content to serve that end.
- w
Unless there is a market fail or push-back from investors/lenders or borrowers.- that would see regulatory correction, Still good to make the argument of what is right for the record.. Appraisers were reight in their warnings for years pre crash and we are right about warnings around bifurcated expanded to 1004P . Being right is not the same as having the power or influence to prevent it from happening.

 

[J Grant]

Consider this - if you apply the "logic" that some are applying - do a field review on Form 2000, including your own value opinion, according to some, you would have to state that the original appraiser provided significant assistance to your review

LOL

A stretch and I don't think it applies. But if a USPAP change means it applies, so be it. Then in a field review appraiser would state that the OA provided significant assistance. (Which in a sense, they did, even though that was not their intention when they did their own appraisal). I still doubt it would apply but dont' have time to argue it...if it is found to apply then make the statement so what...